Societe Generale vague on equipment finance future

Multinational financial services company Societe Generale’s equipment finance business doesn’t yet have a “for sale” sign, but the future of the business remains unclear.  

French-based Societe Generale, also known as SocGen, is one of the largest European banks, and the company’s equipment finance operations are spread across 35 countries, including the United States and Canada, according to the company’s North American website.  

Despite its size, SocGen may sell its equipment finance operations, which it describes as a “non-core” business, according to a Reuters report. While SocGen has not said if it intends to sell the business, history suggests a sale is possible.  

SocGen in 2020 sold SG Finans, its equipment finance and factoring arm covering Norway, Denmark and Sweden, to Nordea Bank for 575 million euros ($634 million), according to the company’s website.  

SocGen Chief Executive Slawomir Krupa remained tight-lipped about possible asset disposal during the company’s capital markets presentation Monday. 

“We don’t disclose the potential disposal plan or disposal list. It’s highly sensitive information,” he said. “I’ve been around for a long time, and I remember years when we said at the beginning of the year we would sell X, Y and Z by the end of the year, but the ones who bought the asset sold it for four times the price two years later.” 

Krupa, who joined SocGen in 1996, became CEO on May 23 after serving as the bank’s head of global banking and investor solutions. The strategic plan aims to streamline the company’s business portfolio, increase capital and improve flexibility, Krupa said. 

“There is no complacency in how we approach this topic [of disposals],” Krupa said. 

Strategic plan

While SocGen may ultimately sell the equipment finance division, the company’s mobility and leasing strategy includes equipment finance, as well as ALD Automotive, the company’s fleet management and operational leasing division, and its consumer finance division, Krupa said. 

“Closer cooperation between these businesses, ALD and equipment finance, will open interesting prospects for synergies, particularly in the automotive sector,” he said. “Key to some customers and partners who seek integrated offerings spanning from leasing to traditional car finance.” 

The company estimates its mobility ecosystem, which includes the mobility and leasing businesses as well as mobility as a service and insurance offerings, as a $74.8 billion integrated business that spans 44 countries, according to the company’s presentation. 

Societe Generale Equipment Finance has $25.6 billion in outstandings across 35 countries, according to the company’s website. 

SocGen’s stock dropped after the announcement of the company’s strategic plan and the lackluster response by analysts to the new strategy, according to Bloomberg. Societe Generale SA’s stock [OTCMKTS: SCGLY] landed at $4.97 per share at market close today, down 0.6% from market open. Shares have fallen 11.7% over the past five days. 

The company’s market cap stands at $20.2 billion, making it one of the least expensive European banking stocks.